GRA to take three VAT defaulters to court
Stabroek News
January 4, 2007
A supermarket, a hardware store and a restaurant are to be charged by the Guyana Revenue Authority (GRA) for contravening the Value Added Tax (VAT) law.
This was disclosed yesterday by Commissioner General Khurshid Sattaur at an emergency press conference to which Stabroek News was not invited.
A release from the Government Information Agency (GINA) said inspections conducted by officials of the GRA discovered a number of irregularities. Sattaur declined to disclose the names of the establishments but said that while there were a number of offences "there was general improvement with compliance by a lot of the businesses".
GINA said the GRA was also looking into reports of hostility and in some cases threats against staffers conducting inspections and that Sattaur stressed the need for compliance by businesses to ensure that consumers are not exploited as a result of the VAT.
Meanwhile, in a press release the Ministry of Tourism, Industry and Com-merce said that following visits it determined that Nigel's Supermarket, Bonny's Super-market and Empire Shopping Plaza did not have a VAT certificate displayed but were still charging consumers 16% VAT.
"With immediate effect purchasers from Nigel's Supermarket who have paid VAT on zero-rated items are asked to take their bills for a refund. After investigations the management of Nigel's Supermarket admitted to their oversight and will refund customers upon evidence of receipt". Several consumers had complained about this practice on Tuesday.
The Ministry said it was also investigating other entities that have applied VAT on zero-rated items and was alerting customers to demand refunds immediately and to contact the Consumers Affairs Division of the ministry.
Consumers seeking redress or wishing to share any information may contact the division at the VAT hotline 225-5858.
The ministry also added that another practice detected was the absence of adjustments to the 2006 prices to reflect the removal of the consumption tax.
Recalculate
Stabroek News yesterday checked again on businesses to see how they were handling the tax. While some retail outlets have slapped the 16% VAT on their old prices, others have maintained their prices as of December 2006 inclusive of VAT.
And Bounty Meat Centre also plans to recalculate their prices as if the items were brought in under VAT, since the items were priced inclusive of the Consumption Tax (C-Tax) and VAT.
Bounty Farm Manager Patrick deGroot told Stabroek News yesterday that they will begin price changes at all three Bounty Meat Centres from today. DeGroot explained that they have asked their suppliers to provide the new prices for items which will be taxed at the VAT rate of 16% and Bounty will begin using those prices for their old stock, which were brought in at the C-Tax rates which range from 5% to 128%.
The manager said with this price reduction it means that they will lose but Bounty has decided to bear this cost. Bounty, not being an importer or a manufacturer is not eligible for the tax relief being offered by the government for goods imported or manufactured in December 2006.
Bounty's suppliers were expected to begin supplying the new prices from yesterday to facilitate the price change on their computerized systems.
If the prices remain inclusive of the C-Tax and the 16% VAT, deGroot said that consumers will be facing double taxation.
On December 27, 2006 Stabroek News visited retail outlets Courts Guyana Inc., Main Street office and Singer Guyana Inc., Water Street office, to check the prices of several items and to compare those in January when VAT was applied.
During the December visit at Courts, a Living Room Suite inclusive of a sofa and two single chairs could be bought for $79,999 and a check yesterday at Courts revealed that consumers can still purchase a similar Living Room Suite for this sum inclusive of VAT. A seven-piece dining table during the December visit could be purchased for $209,999 and yesterday's visit revealed that a similar seven- piece dining table can still be had for this amount inclusive of VAT. In addition, a King Size bed frame in December could be bought for $86,999 and yesterday this price remained unchanged and was inclusive of VAT.
Stabroek News was unable to make contact with the Courts manager to ascertain if prices across the store remain-ed the same inclusive of VAT.
The GRA has assured businesses that registered before December 15, 2006 that they will be given input credit at 16% until March for stocks imported or manufactured in December, and as such should not increase their prices.
Exhausted
During the visit in December at Singer's, Stabroek News saw a silver double door refrigerator for the hire purchase price of $399,996 and a cash price of $359,996. Yesterday, the hire purchase price was $464,000. In December, the cash price for a Toshiba 20-inch television set was $39,999 and the hire purchase price was $49,995. Yesterday the prices were $46,398 VAT inclusive and $56,000 VAT inclusive respectively - both showing increases. The store had no prices on its display items so these prices were gleaned from the clerk.
Singer's Manager Eric Whaul told Stabroek News that all the items that they would have paid the C-Tax on and were not sold last year will show an increase, since VAT was applied. He said that the outlet is not an importer and as such is not benefiting from the stock relief.
The manager further explained that all the items that they have acquired on which the 30% C-Tax was not applicable, the prices for those items have decreased. For example, he noted that the store has on sale television sets and washing machines that were bought at the VAT applicable rate of 16% and those prices have decreased. It was noted that television sets which were sold for $66,000, when bought with VAT applied and not the C-Tax are now selling for $55,000.
The manager pointed out that Singer's is faced with three situations, for example it sells items which were subject to no C-Tax and are now subject to 16% VAT, namely sewing machines; those items which were bought at the VAT rate and are now reduced and items acquired at the C-Tax which are still in stock.
It is this manager's view that over time prices will come down as the old stock is "exhausted."
Consumers meanwhile continue to complain about the increased cost at the markets.
One such customer called in to Stabroek News to report that after visiting the market almost every item had increased. This caller said that the public needs to be reminded of the zero-rated items since businesses are charging VAT across the board.
On Tuesday several complaints were received that businesses cashed zero-rated items together with standard-rated items, leading to VAT on all the items.
It is illegal to charge VAT on zero-rated items like sugar, rice, cooking oil, onions, garlic, potatoes, milk and baby food.
Yesterday, Stabroek News also saw a bill from Nigel's Supermarket and unlike the bill on Tuesday morning which carried a `sales tax', this bill had VAT clearly marked and even included a VAT analysis detailing the standard and the zero- rated items bought.
One consumer who brought a bill to Stabroek News complained that Nigel's was using its old prices and simply adding the 16% VAT. At German's Restaurant in Tiger Bay, Hubert Urling told Stabroek News yesterday that compared to Tuesday, a few of their prices were lowered after customers complained about the VAT charges. Stabroek News was told that the price of the creole food was lowered.
Not sure
And as the tax took effect many West Coast Berbice residents are still not sure how it would be charged and are of the opinion that they "would not afford to shop anymore."
Some residents told this newspaper that while they did not have to pay any extra cost on items as yet they know that they would not be able to escape from VAT.
According to one woman, "I had done most of my shopping from the stores for the holidays so I didn't have to pay VAT as yet. But I hope that when I do I would not be charged extra on the zero-rated items."
She plans to get a copy of the list of zero-rated items that was published in the newspapers so that she would "not be over-charged."
Stabroek News spoke to businesspersons in Bush Lot, Bath Settlement, Rosignol and Cotton Tree and learnt that only a few of them had registered.
An owner of a general store said that although he was registered and has displayed his certificate in his store he would not change the prices for his products as yet. The reason for this, he said, is because a lot of small businesses have not registered and their prices would remain low.
The man said he has already adjusted his prices to show that VAT would be charged - but this is coming from his profit. He said it would remain that way until he purchases new stocks.
The businessman feels that changing his prices would cause him to lose sales and he wants to make his "products affordable to customers." Besides, the man said it would not be fair to add VAT on the items as some businesses in Georgetown have done since he bought them before VAT was out and had already paid consumption tax on them.
He suggested that the relevant authorities make an official list available to all registered businesses of items that VAT should be paid on and those that are zero-rated.
The man who said that he too is still trying to understand the procedure feels that the list would make it a lot easier for customers since not many of them had access to the list published in the newspapers.
A woman who runs a pharmacy and drug store said her business was registered for VAT but she, too, chose not to increase her prices as yet "because these items are from the old stock."
She also said that she would not be purchasing new items as yet because she heard that prices for some items would be dropped. Like her, other businesspersons were registered but they have not started to implement VAT as yet.
Meanwhile the proprietress of a grocery and general store who has not yet registered said she was subjected to an increase in prices on most items on Tuesday by the distributors of Bermudez products.
The woman said because of the extra cost attached she had to increase her prices by $10 on the crackers and other salted snacks she purchased "to make back my money." The price for a packet went up from $60 to $70. She said customers are aware of VAT and did not complain about the new price.
According to her "I did not register as yet because when I went in to the office they ask me if I am earning $10M per year and I said no." She was told that she can pay voluntarily if she prefers. (Nicosia Smith and Shabna Ullah)